Rusal Negotiates US$1.7 BN PXF Debt Facility

Russian Federation aluminium mammoth U.C. Rusal announced the successful negotiation of a new debt facility yesterday. The firm intends to use the facility to refinance its existing debt.

The new agreement, which is a syndicated Pre-Export Finance Term Facility Agreement (PXF) is for an amount of US$1.7 billion at an interest rate 3M LIBOR+3% per year. The note matures in five years, with repayment to begin after two years.

According to Rusal, commitments during the syndication process topped US$2 billion thanks to substantial support from lenders. The firm ratcheted the principal down to US$1.7 billion as it was more reflective of the company’s actual financial needs and its focus upon deleveraging.

The new note is also calculated in a different way than all its predecessors, as the Total Net Debt/EBITDA covenant will not include debt secured by and dividends paid from MMC Norilsk Nickel shares.

Conditions for payments of dividends were also changed, bringing them in line with the firm’s dividend policy from two years ago. Now dividends may total up to fifteen percent of the Covenant EBITDA, which includes dividends from MMC Norilsk Nickel, and cash sweeps and restrictions upon them are cancelled.

“This new PXF deal is yet another acknowledgement of RUSAL’s financial soundness and the banking community’s trust in the Company following the successful placement of two tranches of Eurobonds and debut tranche of Panda Bond earlier this year,” opined the Deputy CEO of UC RUSAL Oleg Mukhamedshin.

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